On 30 July 1944 at 1242 hrs U-250 attacked the 56-ton Russian submarine chaser MO 105 with a G7e torpedo, at the north side of the Koivisto strait in the Gulf of Finland. The Russian boat was destroyed easily (19 dead, 7 survivors), but the explosion brought other Russian boats to the location.

At 1910hrs, Russian 'Oberleutnant` Aleksander Kolenko, chief of MO 103, got a sonar contact from U-250 and dropped five depth charges. U-250 was not heavily damaged, but because an air-bubble track was visible on the water MO 103 dropped a second series of five depth charges. One of these exploded over the diesel room. A large hole opened in U-250's hull and she sank. Kapitänleutnant Werner-Karl Schmidt along with five other crewmembers in the control room managed to escape at the last minute.

Needless to say the Russians were thrilled to have a German U-boat captain alive and a sunken U-boat in shallow waters. Russian divers soon discovered that the boat lay at only 27 meters under water and had only a slight list of 14 degrees to the right. A large hole above the diesel room was observed. Two large air tanks, 200 tons each, were transported to the area and the Russians worked behind a smokescreen to raise the boat.

The Germans and the Finnish did what they could to prevent the boat, which was equipped with the new secret T5 acoustic-torpedo, also called Zaunkönig (Wren), from falling into Soviet hands. Finnish coastal artillery and German torpedo boats made frequent attacks on the salvage site, but to no avail.

Finally, in September 1944 the Russian raised U-250 and towed it between air tanks to Kronstadt for examination. On 15 Sept, 1944 U-250 was brought into the dry dock at Kronstadt.

The former Commander, Kptlt. Schmidt, had to go first into the now dry boat, as the Russian believed some explosive charges might still be on the boat. The 6 survivors then spent some years in Russian captivity.